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Prepaid phones to reach 1.35 billion users by 2009
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By Anthony Newman, Tuesday 16 March 2004  
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PAYG will take 59% of the market according to Baskerville analysts, especially in developing markets. |
Prepaid cellular users will reach over 1.35 billion users by 2009 with a 59% share of the total global wireless market, according to a new report from mobile industry analysts, Baskerville.
Baskerville's fifth edition of its industry standard Global Mobile Prepaid Strategies and Forecasts, argues this strong growth is a direct result of emerging markets using prepaid services to drive uptake in developing markets including China, India, Russia and Eastern Europe. Steady growth in advanced prepaid markets, such as Western Europe, will also help to drive prepaid, as operators in these regions reappraise prepaid in light of its potential for accessing high data user groups including youth segments, and its favourable return on investment.
Paul Merry, Research Analyst and author of the report comments, "Operators realised some time ago that high subscriptions do not necessarily equate to high revenues.
Further ARPU is not always the best way of considering the actual revenue generated by users when factors such as customer acquisition and provisioning are taken into account.
If Average Margin Per User (AMPU) is considered, a mechanism for taking into account the cost of the subscriber minus the revenue they produce, it soon becomes apparent that prepaid is a potentially highly lucrative service segment".
This is a radical departure from historical conceptions of prepaid as a lesser service offering and takes into account the fact prepaid can generate higher revenue per minute than postpaid customers and generally requires fewer operator expenditures in terms of handset subsidies, billing and collection costs, and bad debt although Merry adds, "this is wholly dependent on how the prepaid service is planned and provisioned for by the operator".
Key concerns identified by the report authors include the Issue of user anonymity inherent in the prepaid service model and strategies to overcome this separation required in order to offer complex billing models such as value-based billing likely to be features of next generation content-based service offerings. These strategies are developing with the use of data-mining capabilities, profitability analytics and predictive churn management - all these factors and developments are exhaustively examined and critiqued within the report while in-depth analysis at the regional and country level tackles questions of operator strategy moving into the content-based wireless economy and the pivotal role of prepaid services within this process.
Further issues relate to the complexity and approaches which can be taken to tackle the underlying support mechanism required to deliver a high quality service to the prepaid user considering the challenges of billing, rating and mediation in the next generation of data services delivered through prepaid and the challenges of prepaid roaming with data.
The state of the telecoms industry and investments made in 3G licenses demand identification and development of services and content that will become successful and produce a tangible ROI. Prepaid can deliver access to the main consumer segment for mobile entertainment
- youth - and places prepaid at the forefront of any mobile operators strategy considering the development of mobile data services.
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